Bankruptcy Tweets for July 2011 – Part III

Catching up on things. Lots of tweets, but no blog posts. Below are more twitter posts since my last post of July 17 with 50 BK cases and commentary and 6 other items of general interest. RSS Feeds are also available. All my twitter posts are here. With hurricane season upon us, I thought some would like the inset infographic, taken from an 8/2/11 post entitled Rock me like a hurricane. Bankruptcy Cases and Topics 10th BAP bars review of order under "law of the case" doctrine bec. 3 narrow grounds for departing from rule are absent. D-TX: Dbtr's deposit to secure performance obligs didnt create an express, resulting or constr. trust favoring creditor. D-MA: Fee-only Ch 13 plans designed mainly to pay the filing atty's fees over time per se violates the good faith reqt. 11th-1st Impression: Order affirming BK Ct merits decision was final & appealable despite undecided issue of atty fees. 9th: Estate prop. revests in Ch 13 dbtr at confirm., so postpet. taxes can attach to revested prop. & not violate stay. B-NEB: Restrictive covenants requiring ch 11 developer to build certain prefab units in exchange for $1M not executory. B-MN: Snapshot in Polaroid preference case (that incl. trustee counterclaim) of constit convolutions caused by Marshall. ED-WI reviews law in 7th Circuit on the requirement that a purchaser act in "good faith" in the context of §363 sales. ED-WI: Issue of good faith can be considered at the motion to dismiss stage in an unstayed appeal of a §363 asset sale. B-MO: Stay extended to all Def. in B/D arbitration actions on "control person" issue only based on identity of interest. D-LA: §362's automatic stay doesn't apply to actions against a nondebtor corporation that is wholly owned by the debtor. 7th Cir. again defers foraging into the debate whether actions filed in violation of the stay are void or just voidable. 7th reminds that §108(c) & IL law provide basis to proceed vs. debtor on claims that become time-barred during the stay. 7th invokes judicial estoppel beyond normal uses to stop gamesmanship in pursuing contradictory positions in 7th & D-Ct. 7th reviews certifying for appeal as a final jdgmt a dismissal of claims vs. nondbtr despite pending stay vs. BK co-def. B-NH: In pari delicto defense doesn't apply to avoidance actions brought under Chapter 5 of the Bankruptcy Code. B-DE wont dismiss cplt to recharacterize debt where contribs. were pro rata / subord unsec. & int. deferred / below-mkt. B-FL: Atty depositing postdated retainer checks postpet. violates stay & creates impermissible adverse rel. w/client. D-IN: No abuse of discr. in sua sponte dismissal of adv. cplt w/out much notice or opport. to cure failure to prosecute. 8th BAP: Trustee didn't meet burden that benefit to estate from property sale outweighed harm to co-owner under §363(h). 7th excludes municipal utility charges from stay exceptions of §§362(b)(3),(9),(18) bec. not a tax or spec. assessment. B-IL: Non-waiver clause in LLC operating agreement limits the risk that the waiver doctrine can be applied against you. D-OH: Using "10b size category in assess[ing] small stock premium for [valuation] calculations" beats Daubert challenge. BK-TX reviews tension between amending pleading under FRCP 9(b) & FRBP 4004(a)'s mandatory deadline for nondisch. cplts. 6th BAP remands on BK order to disgorg prepet. retainer in converted ch 11 case to determine if valid atty lien existed. BK-NC: CIT properly exercised recoupment right postpetition to min. commission fee payable under factoring agreement. B-NH: Ttee's fraudulent transfer cplt survives dismissal w/out identifying actual creditor providing § 544(b) standing. D-CA wont preclude appeal of trustee's settlement transferring litigation claims to 3d party under eq mootness doctrine. D-CA won't apply §363(m) mootness to an order approving a settlement even if the order accomplishes nearly same result. B-DE: Faltering co. defense to WARN Act inapplic. bec notices didnt provide suff. facts justifying lesser notice period. B-DE concludes in class action BK adversary that grandparent mgmt co. is co-liable w/BK debtor for WARN act violations. B-DE disagrees with per se rule that grandparent corps can't share common ownership of distant indirect subsidiaries. B-SDNY notes its disapproval of plan releases by BK estates when the requisite supporting due diligence hadnt been done. B-SDNY reflects on its disapproval of releases by 3d parties when they don't satisfy 2d Cir.'s Metromedia requirements. B-SDNY, post-Marshall, requires change to term of confirmed plan requiring claims ag. ex-D&Os be brought in BK Ct only. B-SDNY notes as an aside that it has sustained objections to broad plan releases for former D&Os in 4 identified areas. B-SC interprets when "cause" exists under §363(k) to grant or deny a disputed lender the right to credit bid in a sale. B-CA: Ch. 20 Debtors still can't "permanently" strip off unsecured junior lien w/out either a discharge payment in full. B-OH: US Trustee can take 2004 exam re Wells Fargo's standing to file proof of claim in ch 13 case & re claim's validity. D-MI reviews how interrelated creditors/claims can be before they are ineligible to serve as separate §303 petitioners. B-SDNY thoroughly reviews competing interests of FRCP 15(a) & 16(b): freely amend pleadings or hold to scheduling order. B-SDNY:Waiting 4 yrs to amend affirm def to add §546(e) safe harbor, thinking it can be raised at leisure, is offensive B-TN: Ponzi scheme fraudulent tsf. case law is clear: investors may keep their returned principal, but not any profits. CWT's @douglasmintz @pfcad (PFriedman) & M.Ellenberg, quoting Anna Nicole, ask re Stern v. Marshall: "How Big Is It?" B-DE: Recharacterization cplt .survives Twiqbal; 7 factors favor rechar. as equity, 3 favor debt, and 2 favor neither. D-FL excludes testimony per Daubert of accounting expert who tries to apply AICPA auditing stds. to non-auditing work. D-MN: Circuits are split re right to jury trial on liability/dgs once debt found nondischargeable, but waiver found here. Good review of brief seeking JD-based dismissal of pref cplt based on reading of Marshall/Langenkamp/Granfinanciera. B-MT approves 9019 stip for 1st Lender's creative financing of ch 7 Ttee's continuing hotel ops. to preserve sale value. B-AL denies plan provision giving plan cmmttee right to bring claim, financed by estate, that plan trustee won't pursue. Topics of General Interest Jon Stewart Criticizes Obama for 'Weak' Debt Talks Performance. Extremely sad news re ex-K&E BK partner (and my first boss/mentor). Our heartfelt prayers to Ted & his family. And here I thought I overate yesterday! Guess it's all relative. A Visual Representation Of MurdochGate's Toxic Spiderweb. The Head Of The World's Biggest Hedge Fund Sees "Economic Collapse" Due To Money Printing By Early 2013 22000 digitized photos (1898-46) of Jerusalem & ME donated to Lib. of Cong by members of the Amer. Colony in Jerusalem. Thanks for reading! © Steve Jakubowski 2011

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